How to set up a face rig
Well facial rigs can be hard, it's better to learn simpler rigs first. For the model you're attempting, I would recommend joints, they work quite well. Remember that he is a rigid character so apply bones to mesh parts with "Bone" not any others as it wont distort different sections but rotate like using R on the object.

Blender cookie has great tutorials on facial rigging, especially David Ward's tutorials.